Mexico's Finance Minister Pledges Moderation in London Meetings ...

3 days ago

BNN

(Bloomberg) -- Mexico’s finance minister met with investors in London this week to reassure them that President-elect Claudia Sheinbaum will moderate the impact of a planned judicial overhaul and reach its goal for a smaller deficit, according to people with knowledge of the discussions.

The government will ensure that the application of its proposal for the judiciary — via secondary laws needed to implement the changes — will be sensible, said Rogelio Ramirez de la O in the meetings, which were held with small groups of investors at a hotel in London. Ramirez reiterated Mexico’s goal of cutting the 2025 deficit to around 3% of gross domestic product, said the people, who asked not to be named since the talks were private.

A Finance Ministry spokesman declined to comment.

Following the ruling coalition’s unexpected landslide win earlier this month, Mexico’s peso sank, stocks tumbled and bond yields soared amid concerns that the bloc would push ahead with constitutional proposals that could dent the country’s institutions. Sheinbaum has supported a judicial reform proposed by President Andres Manuel Lopez Obrador, saying it will be among the first batch of proposals to be debated by the new Congress.

Ramirez told investors at the London meetings not to worry about the judicial reform, which seeks to elect judges including those at the Supreme Court via popular vote, and that the proposal aims to reduce corruption, the people said.

He also assured them that Sheinbaum would continue to support the heavily indebted state oil company Petroleos Mexicanos, said one of the people. There is an understanding among officials that Pemex needs to operate in a more business-oriented way, the person said, adding that the government expects improvements at the company level.

Regarding the deficit, Ramirez told investors that about three-quarters of the reduction in the deficit from 5% of GDP to 3% would correspond to spending cuts, while the rest can be achieved by improving tax collection through digitization efforts that will seek to draw in swathes of Mexico’s vast informal economy.

Unlike in past administrations, in which finance officials often rushed to hold lengthy calls with investors and organize press conferences amid moments of currency volatility, Ramirez has opted for a more restrained approach.

He held a conference call that lasted only several minutes the day after the peso initially plunged on the election results. Most recently, he made a brief appearance at a conference hosted by JP Morgan & Chase last week in Mexico City where he did not take questions.